Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Pfizer?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Pfizer (PFE) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.84 a share, just 26 days from its upcoming earnings release on November 3, 2026.
By taking the percentage difference between the $0.84 Most Accurate Estimate and the $0.75 Zacks Consensus Estimate, Pfizer has an Earnings ESP of +12.30%. Investors should also know that PFE is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
PFE is just one of a large group of Medical stocks with a positive ESP figure. Johnson & Johnson (JNJ) is another qualifying stock you may want to consider.
Johnson & Johnson, which is readying to report earnings on October 13, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $2.71 a share, and JNJ is five days out from its next earnings report.
The Zacks Consensus Estimate for Johnson & Johnson is $2.66, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.10%.
PFE and JNJ's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>
Should You Invest in Pfizer Inc. (PFE)?
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Pfizer Inc. (PFE): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).